Terminology Thursday

The Nifty has shown a great move in past fifteen days moving from 4600 to 5150. The DIIs and moreover FIIs are back on track for investing. One person that still missing these days are our very own retail investors. Not even 10% of the country population participate properly in the stock market whether it’s going up or going down. Some tell it’s a speculation and some tell it’s hard to learn but everyone has got their own reason to stay away from the market. We at HBJ Capital continuously try our best to increase the participation of the small retail investors because we believe that it’s them who are the real king of the market. After a good response to Workshop Wednesday where we taught some stock market basics to the people we are back with another programmer called Terminology Thursday. In this we will help the investors clearing doubts over the various terminologies which they come across in day to day investing and they find nobody to clear their doubts. This week we are here with following terms:

• A-D Index or Advance Decline Index: A Perfect tool for detecting the trend of the market. A tool which detects the bullishness or bearishness trend of the stock market. The simplest way to calculate the Advance Decline index is to divide the number of stocks which are on up move by number of stock which has shown a decline move. For example: There are 30 stock in the Sensex and if 25 stocks are on rise and 5 stocks are on fall so A/D index values goes to 25/5 = 5. Any Value above one indicates bullish trend and value below one indicates bearish trap on the market.

•  Air Pocket Stock: A stock that shows a sudden drop in price generally due to bad news. The fall generally makes a huge gap between last day close and next day opening. The stock tend to behave same like aircraft when air pocket force the aircraft to lose its altitude and comes down sharply same here bad news push the stock price in downward direction. For example recently, when Reliance Industries Limited declared below par result on Friday we saw investor punishing the stock on Monday. 

• Pigs: They are greed driven people whose ultimate agenda is to make multi fold profit in very short stint. These people invest in the market on “tips” or “news” without any proper study of the stocks. Ultimately these are the people who are bound to make losses because of their greed and emotional attachment to their holdings and acting completely against their own strategy. As Michal Douglas rightly said, “Bulls makes money, Bear makes money, only Pig gets slaughtered.”

• Chickens: These are the investors who are quite afraid to lose anything on their investments. Their fears are so high that the need to make profit is vanish from their eyes resulting transferring their money to debt market or getting out of the market completely.

If you have any doubts on any concept or term feel free to mail me at niraj@hbjcapital.com or post it as comment so that we can clear your doubts.

Niraj, Market Learner [niraj@hbjcapital.com]


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